How Our Customers Saves Salesforce, Coming Out As A Woman And Powering Up Together

Please welcome Mullen Yen, COO at Saster and Magdalena. Yes, il first investor and founding board member, Salesforce author, Power up founder, Broadway Angels founder, Drive Informed. Good afternoon. Thanks for coming here after lunch. Magdalena, I'm so excited to be able to talk to you today. First of all, I want to congratulate you on your new book, Power Up. We're going to talk about that in a moment, but first I want to recognize some of your truly amazing contributions. You're a technology pioneer and really one of the founding leaders of Silicon Valley. Three of the companies that Magdalena co founded were the first to commercialize Internet access, e commerce infrastructure and also electronic payments, three pretty key technology areas, I would say. You became a partner with US Venture Partners and you co founded one of the first women investing groups, Broadway Angels. You're now a board member of Zora Smartsheet and of course rpx, the company that we share a board seat on. And as mentioned, you're working on your fourth startup, Drive Informed, with one of your two sons. So you found time to have kids along the way too. So last year at Saastr, many of you who were here may remember, the executive order limiting immigration was signed, and Saastr was one of the first companies that signed on to join an amicus brief against the travel ban. Now, as you've heard from this morning, diversity in immigrants are a really important part of Saster, as well as the tech community overall. So you, Magdalena, are an immigrant. And in many ways, you're the epitome of a Silicon Valley immigrant success story. So at the age of 17, Magdalena flies by herself from Istanbul to South side Chicago with two suitcases and $43. So how do you make your way to the Silicon Valley and decide to start three companies along the way?

So I come from Istanbul to Illinois Institute of Technology in south side Chicago, and then the way I make my way to California is that it turns October and it starts snowing. And I am coming from Istanbul and I've got a leather coat and leather boots. And my roommate says, when is your mom going to ship you your winter clothes? And I say, these are my winter clothes. And she says, you'll never make it, you'll die anyway. The only other people who are complaining about the cold in Chicago were from California, it turns out. And I said, it must be warm in California because obviously you guys are complaining as well. Anyway, I asked if there were good schools in California. Turns out they were from Northern California. They recommended Berkeley and Stanford to me. I applied to both and I ended up at Stanford. So that's how I made my way to California. And then I was pre med. I was studying at Stanford, taking vertebrate biology. I got 94 over 100, and I got a C on that test. I went to my professor and said, sir, you made a mistake. I got 94 and you gave me a C. And he says, no, you're the one who made the mistakes. In fact, I grade on a curve. And I was incredibly disheartened. And I thought, I'll never make it because I'm such a good student. That day, just coincidentally, I sat next to a man who asked me how I was. And I didn't realize that when Americans say, how are you? How are you doing? They don't really expect an answer. So I gave him my long answer. I said I was doing very poorly because of the situation, right? I'd gotten, I thought, a pretty good test result. He said to me, you should become an engineer in engineering. We collaborate, we work together, we do problem sets together. It's not like pre med. We're not that competitive. So next chapter, I switched to engineering. I. I get an undergraduate degree in industrial engineering, and it turns out I can't get a summer job my junior year. And I go to my advisor and I say, what's wrong? All my friends have summer jobs. No one is offering me a job. He says, well, you're an immigrant. You don't have a work permit. Of course no one's offering you a job. And again, I say, am I doomed for life? Will I never get a job in America? And he says, no, get a master's in electrical engineering, and you'll have all kinds of companies actually sponsoring you for green card. So I got a master's in electrical engineering. And I don't realize Silicon Valley is next door. And really, that's the rest of this history. I graduate, I become an employee, a semiconductor design engineer, and I have about a decade of working for corporations. Very late 80s, early 90s. I find myself in a situation where I have two kids and I'm out of a job. And turns out my husband is also out of a job. And when people say to me, well, how did you aspire to be an entrepreneur? I say, I never aspired to be an entrepreneur. I became an entrepreneur because I couldn't find a job. And literally, I'm interviewing, and it turns out I'd had a consulting stint. So I'd been out of the operating world. I was on the consulting side, and I was having a very Tough time getting a job offer. So I become an entrepreneur. I have to create a job for myself. And the only thing I could think of is figure an area where you can be an expert. You can know more than the next person sitting next to you. And it was the Internet space that I decided to focus on because Internet access was still in the domain of universities and nonprofits and military. And I truly believed in my heart, having used the Internet all, all through my Stanford years, that sooner or later was going to get commercialized. And that's how I started an Internet access company.

And so that was the first of three companies that you started?

That was the first one. Internet access did become commercial. UUNet went public in 1994. I'm not one of the founders of UUNet. I actually founded another company with my co founder, Dan lynch. And we merged ourselves into UUNet. And after UUNet went public, we left and started a second company, Cybercash. We were the very first e commerce payments company. So very early days, I'm talking about Amazon having revenues of less than $5 million when they were just a bookseller. And we were providing payment solutions so that consumers could use their credit cards and pay merchants and merchants could accept credit cards online. Believe it or not, it was revolutionary at the time.

So somewhere along this, along the way, you met Marc Benioff.

Correct? I actually met him at cybercash.

And so Magdalena is the first investor and the first board member of Salesforce. And Salesforce, especially in this community, is held up obviously as an enormous success story. But in the early days, I mean, these were even the days before Parker Harris. In fact, I think you put Mark and Parker together, it wasn't so easy. So tell us about the early days.

So the way I met Mark is that when I was at Cybercache, we were creating strategic partnerships with various companies. Eric Schmidt I was working with at sun, and I was working with Marc Benioff at Oracle. And after I left cybercash and did my third company, Mark and I continued to work together. Actually, the third company got acquired, but Mark had wanted to be an investor and we made a few investments together. And one day Mark called me and said, listen, I need to have lunch with you because I have an idea I need to bounce off of you. And the idea was taking Siebel Solutions, boiling it down to the 20% or 10% of the functionality that most people people used, leave the other 90% behind and turn that product into a software as a service model. We didn't use the word software as a service. At the time we didn't have the word cloud. It was a very basic idea. We did have ASPs for those of you who remember that. So it wasn't completely out of the box idea, but it was out of the box in the sense that we really had a multi tenant environment that we were going to basically be hosting the software in a multi tenant environment. So when Mark and I had lunch that day, I already believe that the end of enterprise software was coming as we knew it. It was too expensive, mid size and small companies couldn't really afford it at all. And even the large ones who could afford it had such a tough time with the implementation that spent millions of dollars on the license and then another million or two on the implementation side. So I truly believe that those days were going to be over.

So remind us what year this was.

Okay, so this is 1998, this is late 1998 and we incorporated shortly after, I think right at the beginning of 99 and 99. Remember it was the dot com boom. So as soon as we wrote the software and we pushed it out there, we had a ton of dot coms who turned out to be our customers and they were paying for it. We were completely under the radar. So the idea was never, never be noticed by a CIO because what you really want is the employees, the salespeople to be using this, paying with their own credit card. And we had great success. A lot of the dot coms adopted us, we were doing very well. And then something happened, that dot com bust happened and our customers started running out of cash and going out of business. So Now I'm talking 2001. We are burning somewhere around million to a million and a half a month. And I go back to the venture firm at the time. I'm a venture capitalist to the venture firm US Venture Partners where I'm working. And I say to my partners, listen, I'm going to bring this company in. You already know it, you've already heard from me. And it's a great opportunity to invest because the company really needs cash. Turns out we present and I get turned down. And not only do I get turned down by my firm usvp, but we get turned down by pretty much every venture capitalist that we go now.

And what were they telling you when they turned you down?

Well, first of all, we were called salesforce.com and they were saying, haven't you guys heard there was a dot com bust? Why don't you get that dot com out of your Name like what kind of chutzpah do you have? And then the second thing they were saying is like the idea of having customers give you their customer data, their sales data outside their firewall, that's crazy. Like change your model, put it inside the firewall, allow for that. And that was our religion. The religion said, no, we will not do that because that would go against everything that we had built. So 2001 fall, when we couldn't raise money, we almost didn't make payroll. We were at the brink of bankruptcy.

How many employees were you at the time?

How many employees that I can't remember, but enough that you're worried about it that you can just go into your back pocket and play out the cash. So the bottom line is it was very tough on me because I really, I knew Mark relied on me to raise capital because I was a venture capitalist and I spent many, many sleepless nights full of anxiety trying to figure out where will we get the cash from. And then I had the aha moment of hey, we don't have VCs loving us, but we have customers that love us and the customers currently pay on a monthly basis. Again, part of the religion was no contract, right? It was very free to the customer. They just use whatever they want. They can always terminate. But my aha moment was what if we ask the customer to actually pay up front for a discount, a one year, maybe even a three year term, then we will be able to solve our cash flow problem by getting the cash applied.

And so what was Mark's reaction to that?

He was like, no way, are you kidding? I've been preaching against contracts and now you're telling me to put in place contracts that I've been saying no contracts, no software. The good news was that just as I was thinking this, some of our salespeople who were very aware of the fact that we were in this cash crunch had bounced the idea off of a couple of customers. So the bottom line is we did implement the Mark did finally come around. We did implement the one year payment upfront, which of course now is. The industry uses this all the time. But at the time it was very revolutionary and ultimately our customers ended up saving us and it took us less than six months to turn around and we became cash flow positive.

Didn't the dot com bus ultimately actually help your business?

Very much so, yes, absolutely. The dot com bust, what it did was it enabled the small players like us who had a new business model to get large corporations to actually come and become our customers. Because The CIO budget started shrinking after the dot com bust. The idea of paying multimillion dollar cheap check to a software company was not that palatable when the industry went down. So if we had the functionality that most people used, why wouldn't they go with this model? So the dot com bust absolutely helped us because what it did was it shrunk the CIO's budgets and it opened the door to a new model.

Well, I'm going to shift gears for a moment. About 18 months ago, I read an op ed that you wrote and it was called Coming out as a Woman in vc. And not to put you on the spot, but You've been in VC in venture capital for over 20 years and you've been a woman all your life. And so what made you decide to finally come out as a woman in vc?

Yes, you're right. It was the very first op ed I ever wrote and it got published. I was shocked actually that USA Today picked it up. I wrote it because I felt for the very first time a real obligation to stand up and say, I've been successful in Silicon Valley, I've had a great career, I continue to have a great career. And by the way, I'm a woman. The reason why I felt very obliged to say this was because there was such a negative environment. I'm talking about late 2015, early 2016, when because of the Kleiner Perkins suit by Ellen Powell, the sentiment, especially for younger women, was very negative, like, hey, everything is against us. We'll never be successful, we will never be given those positions. And I was looking at myself, sorry, I touched my microphone and I was looking at my friends and saying, but there are many, many women I know who have been successful. So why don't we stand up and say, look at us, you can be successful. So that if I am a 25 year old or a 30 year old or a 35 year old, I have some role models that I can say, yes, if they did it, we can do it. That was the reason why I wrote Coming out as a Woman in venture capital, because especially venture capital has always been viewed as such a boy's game. And it's not that it's not a boy's game, but it is that someone like me, an immigrant, a foreigner, someone with zero pedigree, when I first showed up here, can be successful. And it's all in your performance. I truly believe that. And it's great for people like me to say, hey, I'm a woman, you know, no, I'm not neutered I'm not male. I'm a woman and I can do it. And like you said, I had some kids along the way, you know, and.

Remember this was 2015. So right after the Ellen Powell verdict, there was a lot of titterings about, oh, maybe we shouldn't be hiring women if these issues are going to come up. But a lot has happened since that article. We have a new administration. And about a year ago, believe it or not, it was only about a year ago that Susan Fowler came out with her Uber memo about her strange year at Uber. And then it was in July that the Google engineer wrote his memo questioning whether or not women were suited to certain jobs. And since then, the media has been reporting there's high profile firings in virtually every industry from medicine to venture capital to tech to academia, to, to. I mean, I don't think anything is to the Humane Society, actually even recently. Garrison Keillor. So people are talking about this problem more and more, which I think is progress, but in some ways, in many ways, the world is more polarized than ever. So I have to admit that back during the election, I was one of those people who sort of guffawed when Mike Pence, the vice president, was saying that, you know what, I follow the Billy Graham rule, which is I don't dine with any woman who's not my wife. But more and more I've been hearing men say that and thinking twice about whether you should have dinner, whether you should have drinks. And it's not just the people that I'm around. Some stats for you. The Harvard Business review found that 64% of executive men were reluctant to have one on one meetings with junior women. And then last summer the New York Times found that nearly half of men felt it was inappropriate to have dinner with any woman and 22% felt it was inappropriate to have a work meeting alone with a woman. And it's not one sided. Over half the surveyed women, 53% felt it was inappropriate to dine alone with a man who was not their spouse. And 44% of women objected to lunch and 25% of women objected to having work meetings with one on one with a male. So Magdalena, given how much mentorship goes on outside of work and even within work, I mean, one on one meetings are obviously hard to avoid sometimes. What do we do?

Well, first of all, I just want to say that these statistics for me personally are incredibly disheartening. I thought that when I left Turkey and came to the United States, I was coming to an Environment where there was a lot more evolution and the way people socialized with each other, I really, really was looking forward to that and I did enjoy that. And to hear this now, where men, and rightly so, I must add, are concerned about spending one on one time with women. And women are as well. So here's my answer to it. First of all, absolutely. As women, we need to make sure that men do not give up on mentoring us, on sponsoring us, on working with us. Because guess what? Still most of the power positions are held by men. So if anything, us women are going to suffer from a movement where men start cutting us out because of consensus concern of litigation or allegations. So here is what I think, and this is what I advise women to do, and men as well. But I'll first start with the women. And that is if you have a sponsor, if you have a mentor, if you have work relationships where you really think the one on one time is very valuable, you need to be the first to step out and say, listen, I really, really appreciate the time you invested in me. I really appreciate the time that you and I are together. And you should just know that I know that we are colleagues. I appreciate you as a colleague and I know there's nothing beyond that. So don't ever worry about being misunderstood because I know where you're coming from. I know where you're coming from when you hug me. I know where I'm coming from when I hug you. So it's on the table, discussed and chapter closed. I think putting things on the table, articulating intent, is the best thing we can do to give each other protection.

And in fact, you had. I mean, this is not a new problem. It's existed for many years. I think it's only now that it's being talked about so much in the open and perhaps more people are aware of the sensitivities around it. But back when you started Cyber Cash, you actually faced a similar situation. Most of your co founders, maybe if all of your co founders have been older male.

All my co founders, all my partners in venture capital, all my bosses and colleagues in engineering. I mean, let's face it, you go to engineering school. I went from an all girls high school to an all boys engineering school, basically.

So tell us about. So what happened when you went to start Cyber Cash? You had an older male founder, Correct. And the founder's wife was not so sure he wanted.

Well, yeah, I actually think she did something incredibly smart. So there was this man who had a very well known reputation of being A womanizer. Dan lynch, phenomenal guy, founder of Interop, and very playful in the way he approached women. So his wife found out that he was talking about partnering with a young woman. So in a very wise way, she invited me to their house for dinner and she wanted to interview me. Basically, she wanted to see where I was coming from, what my intent was, was I really serious about doing a company with her husband or did I have other motivations? And at the end of that three hour or so dinner, she was very comfortable and gave me all her support and encouragement. And again, I really, to this day, now, this is long time ago, almost 20 years ago, but I applaud her for doing that because I do think that if you have concerns, the best way to address them is by head on. Don't talk about it in passing, put it on the table. And I think that it's important for men and women. And the advice I was going to give men, you know, is to do the same thing. If you're mentoring someone who's younger, an attractive young lady, I think it's best to say to her very openly, hey, I want to support you. I want to mentor you. I just want you to know that in my mind, there is no confusion about where you stand. You know, I find you to be a very promising young person. And just like I would mentor a young man, I want to mentor you, period. I think that is really important for both sides.

Yeah. And absolutely on both sides. Right. As the woman, to be able to say, you know what, I appreciate this, and I think sometimes people are not sure whether they should go first. Right. But just having that open dialogue, I think is great advice. And obviously you've seen that work. So Magdalena's book is called Power How Smart Women Can Win in the New Economy. It's a great book. I've bought dozens of copies for lots of friends, and I recommend you guys all pick up a copy. Do you have any? Actually, there's two things. One is it seems really daunting to write a book, and I actually love the story about you as a writer. And then second, and you can decide what order you want to answer this in, is, are there any particular points? There's so many great points in the book, but are there any particular points that seem to resonate more, especially in this day and age, than you might have thought otherwise?

Okay. So the reason why I wrote the book is kind of. It's the continuation of the OP ed. The idea was I have had a successful career, I've had many learnings. I've had many failures, so let's try to bottle it all up. And not just mine, but I also interviewed 27 other women. So let's learn. Let's basically share our learnings with our readers so that in a very open way and in a very pragmatic way, actionable advice. What worked for us, what didn't work for us, how did we do some of the hard things? And one of the things that's hard for people and not just women is reentering. You take some time off, you might have illness or you might go on a world trip or you might be taking care of an ill spouse or an ill parent. How do you come back into the workplace? Or some other very pragmatic. How do you get that job promotion that you really want?

And actually, I'm going to interrupt for a second because one of the stories I actually love in your book is that point that you raised, which is Magdalena actually resigned from the Salesforce board because of an illness. And I think especially as women, sometimes we feel the need to be perfect, right? And if you can't be perfectly there because you're dealing with an illness, it's like, okay, I'm going to resign. That's the right thing to do.

But in retrospect, you said was that. Yes, absolutely. Now I think this whole perfection is our biggest enemy. And I do think that going back to the early days of Salesforce, trying to figure out what's good enough, we would have never created the software if we were looking to have perfect software. It was good enough. That was the whole philosophy. And I think that in my life, one of the learnings I've had is good enough. And stick with that. Don't try to be perfect because you will opt out of a lot of things. Just like I did in this one case with a software salesforce board. I voluntarily opt out because I didn't think I would be perfect. And the other thing in the book I say is I never do regret because I think regret is a waste of energy and it's actually negative energy. So I don't look back and say, oh, what if? What if I had done this? I don't regret stuff because each time you give something up, you get something else. Maybe on the scale it's like this, but it doesn't matter. It's just was a trade off. It was a decision. One of the takeaways and I don't know how many more minutes we have, but one of the takeaways that I didn't expect that would resonate with the book, with people in the book, was this analogy that I open the book and end the book with. And that is where I'm from in Turkey, when someone is leaving on a major journey, the family, the friends and all the neighbors collect around with buckets of water in their hands. And as the person is driving away or riding away, they throw these buckets of water after the person. And the message is, may you be like water. May you always flow to a destination just like water does, right? I mean, if there's a rock that is blocking the way the road of the water, it'll go around it or sometimes it'll go under it, but it always goes someplace. So that's a send off that they send you away with. And very often in my career, when I've had blocks, roadblocks, I've always said I can flow around this. I might not always end up exactly where I thought I was going to end up. I might end up in a different place, I might have a different trajectory, but I'm always moving forward. And I thought, and my publisher did as well, that the. This might just not resonate with people. This imagery might be just a little too weird. And it's incredible the number of people who reach out to me and say, hey, I love your imagery and I'm actually using it. It's working for me. When things get blocked, I'm saying to myself, no, I can flow around this. So to flow like water. The other thing about water is it's flexible. It doesn't always try to go exactly where it wanted. It'll go wherever it can.

Magdalena, thank you so much for coming to talk to us today. And congratulations again on your back.

Thank you.

And thank you again.

Thank you very much. Thank you for having me.